The Affordable Care Act (ACA or ObamaCare) is changing many things about filing taxes for tax year 2014 in 2015. It is absolutely essential that taxpayers are aware of their new obligations under ObamaCare of they might face penalties for things that could have easily been avoided. Finding out if you are one of the taxpayers affected by the new healthcare laws is the first step.
How Obamacare Is Going To Affect Your Taxes
While the vast majority of tax filers – over three quarters – will just need to check a box on their tax return indicating they had health coverage for all of 2014, people who purchased coverage through the Health Insurance Marketplaces, or decided not to enroll in coverage, should be aware of the additional steps that will be a part of the tax filing process starting this year.
Receive Health Insurance from Employer or Other Government Program
These taxpayers will just need to check a box on their tax return to indicate that they had coverage all year. These people met the Minimum Essential Coverage requirement, which means that they had the basic health coverage necessary to meet the Affordable Care Act’s standards There’s a new line on the 1040 — line 61, to be precise — where you attest that you have adequate health insurance.
ACA and Taxes
- When you file your tax return, you’ll need to check a box to indicate that you and your family had health insurance for all of 2014. Types of health coverage necessary to meet the Affordable Care Act’s standards (Minimum Essential Coverage) include:
- Most job-based plans, including retiree plans and COBRA coverage
- Medicare Part A or Part C
- The Children’s Health Insurance Program (CHIP)
- Most individual health plans you bought outside the Marketplace, including “grandfathered” plans. (Not all plans sold outside the Marketplace qualify as minimum essential coverage.)
- If you’re under 26, coverage under a parent’s plan
- It’s important to note that filing electronically is the easiest way to file a complete and accurate tax return. Last year, approximately 85 percent of taxpayers e-filed. Electronic Filing options include free Volunteer Assistance,IRS Free File and professional assistance.
Purchased through Health Insurance Marketplace in 2014
If you purchased health insurance through the health insurance marketplace in 2014, your filing obligations will be a little different than if you received health insurance from another source. The biggest change is that you now have to prove you still have insurance, and that you didn’t get the wrong amount of health insurance subsidy. If you received the wrong about of a health insurance subsidy, you may be required to pay it back when you file your taxes. All Marketplace consumers will receive a new statement – called a Form 1095-A – that includes all the information they need about their coverage to file their return. Most people think that the government will send taxpayers this information in February 2015.
Receiving Form 1095-A from Health Insurance
It’s very important to wait for your Form 1095-A to arrive before you file your taxes. If you haven’t received a Form 1095-A by early February, you should contact the Marketplace Call Center at 1-800-318-2596. TTY users should call 1-855-889-4325. If you find an error on your Form 1095-A, you should call the Marketplace Call Center at 1-800-318-2596 to find out how to get a corrected form.
If a tax credit lowered your monthly premiums for health insurance in 2014, you will use your Form 1095-A to input some basic information when you file your taxes. You need to compare your estimated income with your actual income – and this could impact the final amount of your tax credit. You may see a smaller refund or owe money back if you underestimated your income. If you owe money back, there are several repayment options available. For example, if you are unable to pay immediately, you may be eligible for a payment plan or an installment agreement.
No Health Insurance Coverage in 2014
These taxpayers may face penalties for not having health insurance coverage in 2014. Obamacare’s individual mandate requires most legal U.S. residents to get covered by health insurance. However, this is not automatic. There are many exemptions that will help people that do have health insurance 2014 for a reason that is exempt under federal law. If you qualify, receiving an exemption is simple and easy, and means you won’t have to pay a fee. It is important for individuals to know that exemptions are available and to understand the steps they need to take to request one.
When you file your taxes, you will enter information about the months you had coverage and any exemptions you qualify for on your tax forms. If you could have afforded coverage in 2014 but chose not to buy it – and you don’t qualify for an exemption – you will have to pay a fee with your federal tax return.
Health Insurance Exemption Information
- If you couldn’t afford health coverage
- If you had a gap in health coverage
- If your state didn’t expand Medicaid
- If you’re eligible to get services from an Indian Health Care Provider
- To claim a hardship exemption